FarmLead Breakfast Brief
Monday, March 6th, 2017
“You have to remember that the hard days are what make you stronger. The bad days make you realize what a good day is. If you never had any bad days, you would never have that sense of accomplishment!”
– Aly Raisman (US Olympic gymnast)
At 7:00 AM CDT in the North American Futures Markets (*not local cash prices*)
(all prices in dollars per bushel unless otherwise indicated)
$1 USD = $1.3369 CAD, $1 CAD = $0.748 USD)
May Corn: +1¢ (+0.25%) to $3.815 USD or $5.10 CAD
May Soybeans: +4.3¢ (+0.4%) to $10.418 USD or $13.927 CAD
May Soybean Meal (per short ton): +$1.10 (+0.35%) to $334.10 USD or $446.66 CAD
May Soybean Oil (cents per lbs): +0.09¢ (+0.25%) to 34.47¢ USD or 46.08¢ CAD
May Oats: unchanged at $2.423 USD or $3.239 CAD
May Wheat (Chicago): +6.3¢ (+1.4%) to $4.598 USD or $6.146 CAD
May Wheat (Kansas City): +5¢ (+1.05%) to $4.768 USD or $6.374 CAD
May Wheat (Minneapolis): +4¢ (+0.75%) to $5.518 USD or $7.376 CAD
May Canola: +2¢/bu / +$0.90/MT (+0.15%) to $9.05/bu / $399.06/MT USD or $12.10/bu / $533.50/MT CAD
Friday’s Winnipeg ICE Close
May Barley: unchanged at $2.231 USD or $2.983 CAD
May Milling Wheat: -5.4¢ (-0.85%) to $4.845 USD or $6.477 CAD
A Few Days Away
Grains this morning are mostly in the green, rebounding from Friday’s lower close, led by oilseeds which are higher on slower Brazilian soybean exports and Malaysian palm oil values hitting their highest level in 2 weeks amidst a 5-day run of higher closes. On Friday we’ll get estimates of palm oil supply and demand from the Malaysian Palm Oil Board, and estimates are stocks will be down 4.4% from January to 1.47M tonnes. On Thursday we’ll get the U.S.D.A.’s March W.A.S.D.E. installment and expectations are that things will be pretty quiet with some simple fine-tuning to the supply and demand balance sheets, albeit South American production and export numbers will likely be the closest-watched figures. Of course, no number really counts until it’s in the bin and that’s still more than a few days away.
New crop December 2017 corn prices are trying to edge closer to $4 USD / bushel on the futures board on the back of U.S. ethanol policy potentially upping ethanol demand. Jerry Gulke of the Gulke Group makes an interesting point of using soybean oil over ethanol to meet biofuel requirements, suggesting that a bidding war for fringe acres may start to materialize in America. What is certain though is that there are changes coming to the U.S. ethanol policy and we’re optimistic that it’ll support demand for more grain, not less. Managed money got caught looking the wrong way on the RFS / ethanol mandate issue last week as hedge funds had their biggest selldown in ag commodities since early February 2016. More specifically, hedge funds increased their net short in Chicago wheat by 28,000 contracts to sit above 55,000 positions, sold off more than 10,000 longs in corn to sit net long 82,000, and sold almost 23,000 long positions in soybeans to drop their net long to 131,600 lots.
In Brazil, logistical issues and export delays in the north continue to support the soybean complex. To help resolve some of the situation, the Brazilian army has been called in to help move trucks through northern roads, whereas the pipeline of supply continues to flow relatively smoothly in central & southern areas. There is some rain on the way this week for the region, which won’t help things, but the same system will hit southern areas where crops are still developing and would be welcomed by those fields. Separately, the rains will also be welcomed by the second crop that’s getting planted: 80% of the second corn crop is already planted which would be 7 points higher than this time a year ago. With corn getting planted ahead of time and corn acres up a bit from last year, Brazilian fertilizer sales are likely to hit a record in 2017 of 35M tonnes (+3% year-over-year).
Coming back to the weather component, while the buzz for El Nino continues to build from a headline perspective, it’s still too early tomake the call, albeit Pacific Ocean waters are warming at a substantial rate, as per Karen Braun from Reuters. It’s hard to ignore the recent warm temperatures of late anyways, which is a potential threat to winter wheat coming out of dormancy a bit early. With limited rains in the Southern U.S. Plains and some decent demand tenders lately, Chicago wheat is getting a bit of support. Conversely, the Canadian Prairies are going to get hit this week with some blizzard conditions, reversing some of the melt-off we’ve seen the past few weeks. Unfortunately, this doesn’t bode well for SE Saskatchewan and Western Manitoba areas which just can’t catch a break in terms of getting a bit less precipitation. The good news is that May temperatures are looking like they’ll come in above average, but of course, this is more than a few days from being materialized.
COMMODITY TRADING INVOLVES RISK AND MAY NOT BE SUITABLE FOR ALL RECIPIENTS OF THIS POST. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.